In this op-ed, the chief AI officer at Eagle Eye Group, Jean-Matthieu Schertzer unpacks how AI adoption in retail is expected to surpass 80% in the next three years, with predictive and prescriptive analysis investments expected to double over the same period of time.
Retail chains worldwide have already made substantial investments in AI tools for one use or another; Amazon alone announced a $4 billion AI investment in 2023.
However, despite this trend, data from the Retail Industry Leaders Association shows only 20% of retailers use data analytics to its fullest potential. There remains huge potential for customer-facing innovation through AI and data analytics. So while the rate of change is still impressive, what’s holding retailers back from adopting AI quicker?
AI completely shifting the future of retail marketing
AI applications have the potential to forever change many aspects of retail, from supply chains to physical and digital store operations to marketing. This is why retailers are making significant investments in this technology.
AI applications can help retailers meet consumer demand for personalised offers and deliver them efficiently at scale. There are, however, a lot of unanswered questions. One of those is, when will this technology be ready for implementation?
The trend is towards a seamless omnichannel experience, integrating both physical and digital elements. AI is playing a role in reimagining these strategies, as companies explore its potential in retail marketing.
The right AI tools can harness the data retailers already hold to deliver real-time individualised offers based on thousands of metrics. Additionally, successful AI-powered data analytics creates a virtuous circle whereby AI multiplies feedback and improves the data to enhance the accuracy of predictive AI.
Loyalty strategies, marketing and gamification
Loyalty strategies can also be improved. According to Retail TouchPoints research, 61% of retailers focus on loyalty program points to drive retention and loyalty. Naturally, customers want this process to be simple and engaging rather than a chore. Other than streamlining the earning and redemption process, retailers have turned to gamification to make it enjoyable.
Gamification turns the boring and mundane into something engaging and exciting. It’s why gamification has been estimated to increase customer acquisition by 700%. Another study discovered that gamification features boosted user engagement by 48%.
Who is getting it right?
AI’s role in driving efficiency is nothing new. Retail giant Amazon has been at the forefront of AI applications for some time. In February 2024, Bloomberg reported on Amazon’s AI-powered shopping tool, Rufus, to help consumers comparison shop and get answers to more complicated queries.
This customer experience improvement enables shoppers to skip the time-consuming search engine process and quickly find products relevant to them via an interactive process.
AI-powered shopping tools like Rufus can increase purchase probability using the following process:
- Detecting shopping intent
- Breaking down shopping intent into a list of needs
- Connecting those needs with the active product catalogue
- Designing intelligent chat responses based on data from the catalogue
Another organisation benefiting from greater personalisation is Australian retail giant Woolworths, which was one of the first adopters of AI for personalisation at scale through its 75% purchase of data analytics company Quantium.
Equipped with their personalisation engine, Woolworths reported that customers were five times more likely to buy than they would have been while using traditional marketing.
The supermarket giant has also significantly boosted its loyalty efforts by introducing its real-time loyalty program. By connecting in-store point-of-sale systems with the loyalty program in real-time, consumers can track, earn, and redeem their points as they shop.
“Our real-time loyalty platform is a re-platforming of our loyalty business that has taken us close to 3.5 years to go from a legacy system that had a number of constraints in what we could do for our members, to a system that is real-time,” former Woolworths CEO Brad Banducci said in a 2023 earnings call.
“It’s Eagle Eye, for those interested in the tech behind it. And it can be instantaneous. It can reconcile full history. And it’s not constrained in terms of the offers we can provide, or how we can repurpose it, so we have an incredibly powerful platform.”
An exciting journey ahead for AI-enhanced retail
Embarking on the path to AI mastery requires adopting AI’s promised competitive edge, developing a strategic approach to data optimisation, and collaborating with expert partners who can navigate the journey to an AI-enhanced retail future with you.
This article is an excerpt from the recent whitepaper, Eagle Eye’s AI Anthology, the definitive resource on leveraging AI for personalisation and retail marketing. To check out the full document, which is full of data and insights from our AI experts, follow this link.
